Some Straight Talk for Younger People on Social Security (and Medicare too)

Let me start out with full disclosure: I’m 69 and next April I will start collecting nearly $30.000 a year in Social Security benefits — the amount I qualify for both on the basis of my highest 35 years of work history as an employed and later self-employed journalist, and because I’ve waited until I hit 70, the maximum age for starting to collect benefits, before starting to receive my checks.

So it particularly galls me to read news articles about that program (and Medicare) saying things like:

Such ill-informed and often deliberately scare-mongering pieces make my blood boil, particularly because I know they, and news reports like them, are targeted at younger people, where the goal is to make them believe that Social Security is not going to be there for them, and so they should stop supporting the whole program. Take, for example, the dire stories warning that the Social Security program this year has begun drawing funds from the Social Security Trust Fund. Actually, as I explain below, that was precisely why the Trust Fund was created! It was advanced funding for that predictable time when an increase in retirees meant that more funding would be needed.

For years, the defense against a concerted drive by the right to kill Social Security by privatizing it as George Bush tried and failed to do, or to whittle it away as Barack Obama tried and failed to do in pursuing a “Grant Bargain” of benefit cuts and tax increase, has been a solid lobby of the elderly retirees who know full well how important the program is. They for years made it a “Third Rail” that politicians challenged at their own risk. But now the strategy appears to be to say, “We won’t take Social Security away from current retirees or people about to retire, but younger people will have to expect something less.” The other tactic is to simply do nothing to fix the system, while the cost of doing so rises with each passing year of shameless inaction.

This article is addressed to those younger Americans — from people just starting to work on up to those in their 40s and early ’50s — because it’s really you who are being conned and who need to start fighting to keep what was created for all of us, young and old, some 83 years ago. You’re also the ones who are starting out as adult workers without for the most part, or the benefit of a healthy, powerful trade union movement to keep pay and benefits high. You will have a much harder time, between greater college debt, higher costs-of-living, and lower net wages and job security, building up the kind of assets your parents and grandparents had.

President Roosevelt signs the Social Security Act (1935) and President Johnson signs the Medicare Act (1965)

Here’s the message: Forget all the propaganda! The reality is that Social Security is not facing an actuarial problem of too many people living too long. It’s a socio-political problem: Do we as a people want to adequately fund the retirement of our elderly parents and of those suffering from disabilities or do we want to go back to an era where they ended up starving on the streets and dumpster diving, or as a burden to their children?

If we want a decent, secure old age — and you’re going to need that when you’re older — the money is there to fund it. What’s needed is the political will and the collective power to demand it.

Medicare’s Under Attack Too

The same can be said of Medicare and of health care in general. Do we as a society want health care to be good for those with money, and shitty or nonexistent for those without it? In the case of both programs, it’s not that solutions don’t exist. In most of the countries of Europe, and even many in Asia, retirement is generously funded by government programs like Social Security that are not going bankrupt even though benefit amounts paid are much higher and populations are even skewed older than here in the US. Likewise, health care is in most modern countries seen as a right and is fully funded by some kind of state-run program, while we have a jerry-rigged system that relies primarily on for-profit systems and private insurance which, taken as a whole, costs more than double as a percentage of GDP and on a per-capita basis what it costs to deliver in other countries. And state-run systems cover everyone while ours leaves tens of millions unable to see a doctor or to get timely care in a hospital.

To those who might say we as a nation cannot afford the hundreds of billions it would cost to adequately fund these vital programs, my reply is: America is currently spending two-thirds of all federal discretionary funds each year — about $1.3 trillion a year — on the military. That’s more than the next 10 countries including China and Russia spend on their militaries. $5.5 trillion has been spent by the US just on the so-called “War on Terror” since 2001 (during which time the amount of terrorism around the globe and the number of people committing acts of mayhem have soared, which shows what a waste the whole “war” has been). And then recall that President Obama ordered, and President Trump has backed a $1-trillion 10-year program to “upgrade and modernize” America’s nuclear weapons. It’s a staggeringly expensive program which serves no defensive purpose and only increases the pressure on other countries to do the same and raises the chance that we — and they — will eventually use them.

None of this spending has made the US more secure. Meanwhile, if we cut that spending in half and applied even a fraction of that saved sum, Social Security could be vastly improved and funded into the indefinite future without raising taxes. A superior national healthcare system free to all Americans could also be established, freeing us of insurance premiums, health care co-pays, and of indentured servitude to our employers for underwriting at least part of our health insurance bill. Those are things that would really provide security to Americans.

A Little History

Looking back, Social Security, established in 1935, was a central element of President Franklin Roosevelt’s New Deal attack on the Great Depression and the widespread poverty it had caused. It remains one of the most successful social programs in the history of the United States, massively reducing poverty not just among the elderly, but among the children of the elderly who no longer had to bear the dual burden of supporting a young family as well as aging parents and grandparents.

It remained that way until the late 1970s, when it became increasingly apparent that a greatly improved standard of living, thanks to social programs like Social Security, Aid to Families with Dependent Children, supplemental food programs like WIC and Food Stamps, and especially better medical care with the 1965 establishment of Medicare, Medicaid and federal health clinics, as well as advances in medical science, had combined with the advancing age of a huge population bulge known as the “Baby Boom” generation born to parents who started families after the end of World War II, to create a huge strain on the retirement system — a strain that would show up as he Boomer generation began retiring in 2007, the year that the first post-WWII babies would start turning 62.

This is because, contrary to the myth perpetrated by critics of Social Security, and widely believed today by most Americans, Social Security is not a government “annuity” where you put money into the system, it grows with interest, and then you get it back in monthly payments at retirement age. Rather, while benefit amounts are calculated by a complicated formula based upon a person’s top 35 years of work, the actual funds to pay those benefits from day one of the program on have been paid not by the FICA taxes you paid over your lifetime, but by the FICA taxes forked over that year by current workers and their employers.

Once it was clear that there would simply not be enough FICA tax revenue coming in from a relatively smaller workforce to fund the benefits due to Baby Boomer generation Social Security beneficiaries (like me next April!) a plan was hatched between President Reagan and Democratic House Speaker Rep. Tip O’Neill to solve the shortfall by a combination of higher FICA taxes beginning in 1983, gradually raised from a then 5.4% for both employees and employers to the current 6.2% rate.(The Reagen-O’Neill plan raised it substantially more for the self-employed, who in the past had paid only part of what would be the employer share, but since ’83 have had to pay double what employees were paying in FICA taxes on their income.) The so-called “full retirement age” was also gradually raised from a then 65 to an eventual 67 in 2024. That’s the age at which a person who retires no longer gets penalized for continuing to work by having some share of wages deducted and paid as taxes to the IRS.

The Social Security Trust Fund: Designed to Be Spent Down

The idea was that by making those changes, Social Security would be fully funded right through the retirement years of the Baby Boomers, the last of whom will retire in 2034 (after which the Baby Boom bulge or retirees will fall rapidly as its members die off and the problem of a shortfall goes away. Meanwhile, a Trust Fund composed of the added funds paid into the system by the higher FICA tax was supposed to cover the shortfall in current workers’ FICA tax receipts.

But a combination of continually rising life-expectancy and of lower-than anticipated-birth rates brought a new challenge. The 1983 fix was not enough. The Trust Fund is now slated to run out in 2034 or 2035, but the Baby Boomer retirees — at least the younger and more healthy among us — will endure into the mid-2050s.

That has led to dire warnings from politicians eager to convince younger workers to give up on hopes of collecting Social Security, and in corporate media which have that same agenda plus a penchant for publishing ill-supported scare stories claiming that Social Security is going “bankrupt” or is a “ponzi scheme,” or at best that “if nothing is done” Social Security benefits will have to be cut by 23% for retirees beginning in 2034.

To that I say nonsense! First of all, if benefit checks were suddenly cut by almost a quarter overnight, the country would face a revolution. Indeed Social Security was at death’s door in the early 1980s, about to run out of funds in five years, when Congress and President Reagan (who before becoming president had been an outspoken opponent of the program) realized they’d be facing just such a revolution and passed a reform rescuing it through higher FICA taxes. The program can be rescued again the same way (though it should not involve higher taxes on the already heavily taxed poor and the middle class). It can even improved to pay benefits more like what people receive in Europe (where benefits are closer to 60% of a retiree’s final working income compared to just 40% for Social Security here in the US).

What could be done to better fund Social Security now? Well, as I noted above, the best solution would be to end the US policy, since the end of World War II, of endless wars and massive unprecedentedly huge military budgets and after slashing personal taxes, apply some of the rest of the eliminated military taxs to better funding Social Security, and to financing a conversion of Medicare into a Health Care for All insurance program that would eliminate the need for Medicare, Medicaid, Veterans Health Care, charity care, private insurance premiums, employer health plans, etc. The savings from doing that would be extraordinary. For good measure and to help raise Social Security benefits so people wouldn’t have to bet on stock markets with their IRA and 401(k) plans, we could also eliminate the cap on income subject to FICA taxation and tax all income — including investment income — and by adding a tax on short-term stock trading.

The Battle’s Already Begun. Are You Ready to Fight?

What this means is that young people — those in their 20s, 30s and 40s and even early 50s — need to recognize how important these programs are to their lives. Right now you young folks are seeing 6.2% taken out of each paycheck (and your employer is paying that same percentage of payroll into the system), and you’re being warned you may get nothing for it. That’s bull! If you only vote for candidates who promise to do what is necessary (see above!) to fully fund the program, Social Security will be there not just for your parents and grandparents, but for you and your children too. It’s a choice you have to make. Anyone who tells you otherwise is trying to hoodwink you into letting this system die. That’s because the Wall Street banks and investment houses that make their money handling people’s investments want it to die so they can get their hands on your hard-earned money to invest for you — for a fee. It’s a giant scam, and the contributions they make to politicians to help them pull it off are to make that profitable scam happen.

When they and the corporate media shills try and tell you that the Baby Boom generation is living high on the FICA taxes you are paying, and that you’ll be getting nothing, you know better. You know how your retired parents or grandparents live, and that’s on Social Security. Ask them. It doesn’t even get adequately adjusted for inflation, so they struggle harder each year to get by. Their benefits should be higher, not lower! And it can happen, if you team up with them and demand improved Social Security, and a secure Social Security that will be there when you need it. And by the way, if god forbid, something happened to you and you became disabled, from an accident or a disease like MS, Social Security is there for you then too. If you’re still a teenager, and a parent dies, you also get Social Security benefits. If your family has only one working parent and one stay-at-home care-giver, and the employed parent dies, that care-giver gets Social Security. Likewise, it the higher earning grandparent of yours dies, that person’s higher social security benefit check becomes the widowed spouse’s benefit. All these things are already there for you and your elders. They are all worth saving, if only because if they go away, guess who’ll have to take over support for those elders? You!

They Try to Call It A Generational War, But We’re All on the Same Side

We’re in a battle that is all of us against Wall Street and the greedy politicians that Wall Street companies support with their legal bribes. It’s up to all of us to recognize the game they’re playing and to defeat them. And if there’s a political battle that we can win, this one is it, because Social Security is critical to everyone of every age, of every race, both genders, citizen and legal immigrant with working papers — anyone who works and pays FICA taxes or is married to someone who works, and to everyone already retired. It’s all of us, and all of us together can make anything happen!

As for health care, just ask yourself why it is that every modern country in the world with the exception of the US has publicly funded health care that covers everyone, yet the US has the highest priced medical care in the world, and it leaves between a fourth and a fifth of us with no coverage, and many more with inadequate coverage, and yet for all that we spend on health, the US ranks down with Third World nations in terms of our life-expectancy, infant mortality, incidence of fully treatable diseases like high blood pressure and diabetes, etc. It’s also the only modern country where the major cause of bankruptcy is a family medical crisis. All this is because we have a system of health care based on private profit. We need to replace that outrage with a public program like they have in the UK, in France, in Italy, in Germany, and in all the countries of Scandinavia. If those countries can do it, as well as countries like Taiwan, Japan, and even Costa Rica and Cuba, so can we. But again we need to join together to make it happen. As with Social Security, this is a battle we can win, because it’s all of us against the big health insurers, drug companies, hospital companies and the rest of the medical establishment, and the politicians they buy. If we’re together in this battle, we’ll win national health care too.

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